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Home Buyer Tax Credit
  
 

UPDATE:

Here are links to two articles about the Extended Home Buyer Tax Credit bill, passed on November 5th, 2009.

The bullet points are:

  • First time home buyers qualify for $8,000 tax credit.
  • Current home owners purchasing a new or existing home qualify for $6500 tax credit.
  • You must buy your house from the day the bill is signed and no later than April 30, 2010.
  • There is an income limit of $125,000 for single buyers, and $225,000 for married couples.
  • The tax credit decreases if your income is between $125,000 to $145,000 for single buyers, and $225,000 to $245,000 for married couples.
  • If your income exceeds the amount states above, then you don't qualify for the tax credit.
  • You must sign the contract by April 30, 2010 and close on the house by July 1, 2010.

For more information, read the articles below, or call me (404) 424-4747.

 

As a REALTOR, I was very excited about the home buyer tax credit bill signed into law by President Obama. The bill was signed on February 17, 2009, as part of the American Recovery and Reinvestment Act of 2009.

Only first-time home buyers are eligible to take advantage of this $8000 home buyer tax credit. To qualify as a first-time home buyer, you must not have owned a home over the past 3 years. Also, the home must be your principal residence purchased between January 1, 2009 and December 1, 2009. Finally, the tax credit is limited to individuals with adjusted gross incomes of $75,000 as a single person or $150,000 filing jointly. There is a phase-out for single incomes between $75,000 and $95,000, and for couples filing jointly with incomes between $150,000 and $170,000.

If you meet the above criteria, you can receive a true tax credit of 10% of the purchase price, with a maximum credit amount of $8,000. This means if you buy a home for $80,000 or more, you can deduct the full $8,000 tax credit from the amount owed to the I.R.S. If you usually get a refund on your taxes, and you qualify for the maximum tax credit, you can add another $8,000 to that refund for 2009. You may also be able to amend your 2008 return and take the deduction in 2008.
You may recall that on July 30,2008, the Housing and Economic Recovery Act of 2008 was signed into law by former President George W. Bush; which allowed a $7500 tax credit for first time home-buyers. This law allowed qualified home buyers to receive a “tax credit” of 10% of the purchase price, with a maximum credit amount of $7500. This means if you bought a home for $75,000 or more, you can deduct the full $7,500 tax credit from the amount owed to the I.R.S. If you usually get a refund on your taxes, and you qualify for the maximum tax credit, you can add another $7,500 to that refund for 2008.
The criteria to qualify for the $7500 tax credit is similar to the $8000 home buyer tax credit—you must be a first time home buyer (as explained above.) The home must be your primary residence. The home must have been purchased between April 9, 2008 and January 1, 2009. And, it is limited to individuals with adjusted gross incomes of $75,000 as a single person or $150,000 filing jointly. There is a phase-out for single incomes between $75,000 and $95,000, and for couples filing jointly with incomes between $150,000 and $170,000.

Here is how the current $8000 home buyer tax credit differs from last year’s $7500 home buyer tax credit:

  • Unlike the 2008 $7,500 home buyer tax credit, this year’s tax credit is not a loan and does not need to be repaid. It's like free money for buying a house during the specified time period and meeting certain requirements.
  • Also, unlike the 2008 $7,500 home buyer tax credit, you can use the credit if you financed your home purchase with state or local bond funding.
  • However, if you sell that home within the first 3 years of ownership, the entire amount of the tax credit is recaptured. This means you will be required to give that money back to the I.R.S. So, if you take advantage of the tax credit, plan to stay put for 3 years.

If you have any questions about this article, or any other real estate questions, please do not hesitate to call or email me.



 
     
 
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